Services‎ > ‎Articles‎ > ‎Industry Basic Info‎ > ‎

Info. Tech.

Source : IW Committee, JBIMS

Information technology in India

IT Industry in India has 2 major sectors, the IT Services Sector and the BPO (business Process outsourcing sector). The ITES ( IT Enabled Service ) Sector in India has gained a brand identity as a knowledge economy and has increased it’s contribution to India’s GDP from 6.1% in 2009-10 to 6.4% in 2010-2011.

Because of this growing industry, India has formed close ties with US and European Union. The top seven cities that account for about 90% of this sector- export are Bangalore, Chennai, Hyderabad, Mumbai, Pune, Delhi, Kolkata, Coimbatore and Kochi. Export dominate the IT–ITES industry, and constitute about 77% of the total industry revenue. Though the IT–ITES sector is export driven, the domestic market is also significant with a robust revenue growth.

History of Information technology in India

Year

Milestone

(1947 – 64)Prime Minister – Jawaharlal Nehru, laid down policies because of which the economically beleaguered country was able to build a large scientific workforce third in numbers of US and Soviet Union 
1951Minister of education Maulana Abul Kalam Azad, inaugurated the Indian Institute of Technology at Kharagpur in West Bengal. Possibly modeled after the Massachusetts Institute of Technology 
1965Relaxed immigration laws in the United States of America (1965) attracted a number of skilled Indian professionals aiming for research. By 1960 as many as 10,000 Indians were estimated to have settled in the US. 
1967Government of India acquired the EVS EM Super computers from the Soviet Union (Russia) for boosting the R&D Sector. 
1968Tata Consultancy Services—established in SEEPZ, Mumbai , by the Tata Group—were the country’s largest software producers during the 1960s 
1975National Informatics Centre was established which has played a key role in e-governance 
1976 – 1980This was followed by the establishment of CMC ( Computer Maintainance Company ) , Patni Computers, Wipro and Tata Infotech 
1980The ‘microchip revolution’ of the 1980s had convinced both Indira Gandhi and her successor Rajiv Gandhi that electronics and telecommunications were vital to India’s growth and development. MTNL underwent technological improvements 
1986 – 87Indian government embarked upon the creation of three wide-area computer networking schemes: INDONET (intended to serve the IBM mainframes in India), NICNET (the network for India’s National Informatics Centre), and the academic research oriented Education and Research Network (ERNET). 
1991Post Liberalisation – the Department of Electronics broke this impasse, creating a corporation called Software Technology Parks of India (STPI) that, being owned by the government, could provide VSAT communications without breaching its monopoly. STPI set up software technology parks in different cities, each of which provided satellite links to be used by firms; the local link was a wireless radio link. In 1993 the government began to allow individual companies their own dedicated links, which allowed work done in India to be transmitted abroad directly. Indian firms soon convinced their American customers that a satellite link was as reliable as a team of programmers working in the clients’ office. 
1992 – 93Videsh Sanchar Nigam Limited (VSNL) introduced Gateway Electronic Mail Service in 1991, the 64 kbit/s leased line service in 1992, and commercial Internet access on a visible scale in 1992. Election results were displayed via National Informatics Centre’s NICNET. 
1999The New Telecommunications Policy, 1999 (NTP 1999) helped further liberalize India’s telecommunications sector. The Information Technology Act 2000 created legal procedures for electronic transactions and e-commerce. 
2002India and the European Union agreed to bilateral cooperation in the field of science and technology. A joint EU-India group of scholars was formed on 23 November 2001 to further promote joint research and development. India holds observer status at CERN while a joint India-EU Software Education and Development Center is due at Bangalore. 
2006The economic effect of the technologically inclined services sector in India—accounting for 40% of the country’s GDP and 30% of export earnings as of 2006, while employing only 25% of its workforce

India’s IT Industry ( in USD bn$)

ParticularsFY 2004FY 2005FY 2006FY 2007FY 2008
IT Services10.413.517.823.531.0
Exports7.310.013.1318.023.1
Domestic3.13.54.55.57.9
ITES-BPO3.45.27.29.512.5
Exports3.14.66.38.410.9
Domestic0.30.60.91.11.6
Engineering services, R&D and Software products2.93.95.36.58.6
Exports2.53.14.04.96.4
Domestic0.40.71.31.62.4
Hardware5.05.97.08.512.0
Exports0.50.50.60.50.5
Domestic4.45.16.58.011.5
Total IT industry (including hardware)21.628.437.448.064.

Major IT Hubs:

RankingCityDescription
1BangalorePopularly known as the capital of the Silicon Valley of India is currently leading in Information Technology Industries in India.
2ChennaiIt is the Second largest exporter of Software next to Bangalore. It has the largest operations for India’s top software company TCS, Infosys ( has world’s largest development center with 25,000 employers in Mahindra world city at Baranur near Chengalpattu, and many centers in IT corridor), and other software companies like Wipro, CTS, Patni, L&T infotech and many companies have major operations in IT corridor, Ambattur and other places in Chennai
3HyderabadHyderabad called as Cyberabad, which has good infrastructure and good government support is also a good technology base in India. The Government of AP Has built a separate township for IT Industry called the HITEC City.
4PunePune, a major industrial point in India. It is also referred to as Education Hub of India. It was declared as Gamma-Global City recently. As one of the largest cities in India, and as a result of its many colleges and universities, Pune is emerging as a prominent location for IT and manufacturing companies to expand.
5CoimbatoreIt is the Manchester of South India, second largest city in the state of Tamil Nadu,India and one of the largest industrial city in India.Among major metro-markets Coimbatore (up 38%) MAY 11 (Bangalore showed the slowest rate of annual growth at 4 percent driven by reduced demand in the BPO/ITES sector),It Become an Upcoming Major IT hub of India
6NCRThe National Capital Region of India comprising Delhi, Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad are having ambitious projects and are trying to do every possible thing for this purpose.
7MumbaiPopularly known as the commercial, entertainment, financial capital of India, This is one city that has seen tremendous growth in IT and BPO industry, it recorded 63% growth in 2008. TCS, Patni, LnT Infotech, I-Flex WNS and other companies are headquartered here.
8KolkataKolkata is a major IT hub in eastern India. All major IT companies are present here. The city has tremendous potential for growth in this sector with upcoming areas like Rajarhat.
9TrivandrumTrivandrum is the capital of Kerala. GOK provides a good platform for IT development in the city with India’s largest IT park Technopark and dedicated Technocity SEZs.
10KochiKochi is the commercial capital of Kerala and is well connected by train,bus,sea and air. Infopark and smartcity are the two SEZ IT parks with more than 100 companies.

Impact of IT on India’s Economy

The economic effect of the technologically inclined services sector in India—accounted for 40% of the country’s GDP and 30% of export earnings as of 2006, while employing only 25% of its workforce. There was a significant rise in the following years to come, especially with the investment bank , and financial firms setting up their IT development and support centers in India

According to NASSCOM, the IT–BPO sector in India aggregated revenues of US$88.1 billion in FY2011. This sector has also led to employment generation. Direct employment in the IT services and BPO/ITES segment was 2.3 million in 2009-10 and reached nearly 2.5 million by the end of financial year 2010-11.

Indirect employment of more than 8.3 million job opportunities to be generated due to the growth of this sector in 2010-11 and 2011 -12 . India is a dominant player in the global outsourcing sector. With the prediction of India having 50% of it’s population in the working and employable sector. This shows a positive sign, and will be fundamental to India’s growth

However, the sector continues to face challenges of competitiveness in the globalized world, particularly from countries like China and Philippines. In order to tackle this, India should focus on its technical education system, and should be producing world class engineers in the IT Section, and Indian Companies should focus on retaining this talent, rather than exporting this talent to the foreign countries.

The recent global financial crises have deeply impacted the Indian IT companies as well as global companies. As a result hiring has dropped sharply, and employees are looking at different sectors like the financial service, telecommunications, and manufacturing industries, which have been growing phenomenally over the last few years

Comments